RAJESH BALIA, J. - (1.) THE Tribunal has referred the following questions of law arising out of this appellate order in ITA No. 162/Jp/1996 relating to the asst. yr. 1994 -95 in the case of applicant -assessee : 1. Whether, on the facts and in the circumstances of the case, the Tribunal, in violation of the audi alteram partem rule, was right in holding that the action of the CIT(A) in upholding the adjustments made by the AO under Section 143(1)(a) was reasonable and justified ? 2. Whether, on the facts and in the circumstances of the case, the order of the Tribunal in omitting to give its finding in respect of the contentions raised, is not vitiated in law ?'
(2.) THE applicant -assessee at the relevant time was the public sector corporation controlled by the. Central Government. It has filed a return of income for the asst. yr. 1994 -95. While issuing the intimation under Section 143(1)(a) as per the provisions prevailing at the relevant time, the AO purported to make adjustment under Section 143(1)(a) made an addition of Rs. 6,91,46,266 which has been charged by the assessee to P&L; a/c as provision for payment of revision in basic pay as per charter of demand and Government instructions. The additions have been done on the basis of the opinion of the auditors in their audit report that this is contingent liability. As a result of the aforesaid additions made vide intimation under Section 143(1)(a), additional tax was also imposed. The assessee has contended in appeal that the provisions for enhanced wages was an ascertained liability accrued from 1st July, 1992, with the expiry of the previous term of the operating settlement and fresh charter of demand having been raised and the matter was under negotiation to determine the extent of revision of wages, increase in liability was certain and not contingent. At any rate, it is a highly debatable issue which cannot be determined under Section 143(1)(a) by way of adjustment for raising demand for additional tax and could have been only determined by way of regular assessment under Section 143(1)(a). This contention did not find favour either with the CIT(A) or with the Tribunal and the additions made by the AO were maintained by both the appellate authorities primarily relying on the opinion of the auditors that it was contingent liability which was not liable to be deducted under the provisions of the IT Act.
(3.) ON an application made under Section 256 of the IT Act, 1961, the aforesaid questions of law have been referred to us for our decision.;